Fiscal Year 2010 Financial Report and Prospects for the Future

1. Public Safety Personnel Retirement SystemCorrections Officer Retirement PlanElected Officials’ Retirement Plan Fiscal Year 2010 Financial Report and Prospects for the Future Version Date : 1-6-11

2. Total Fund vs. BenchmarkFYE June 30 *Total Fund returns are gross of fees ** Benchmark 7/1/09-6/30/2010 30% Russell 3000, 20% MSCI World Ex-US, 20% BC Aggregate, 8% NCREIF MPI, 8% Russell 3000+100 bps, 8% ML US High Yield BB-B Rated Constrained, 5% CPI+200 bps and 1% 91-day T-Bill.

3. Asset AllocationJune 30, 2006 at Market

4. Annual Index Returns(Fiscal 2005-06) *Data only reported on a quarterly basis Total fund

5. Annual Index Returns(Fiscal Year 2006-07) *Return is based on 3 month smoothing of NCREIF’s quarterly data. Total fund

6. Asset AllocationJune 30, 2010 at Market Total fund

7. Total Fund Rates of Return (Gross of fees)

8. Total Fund Performance As of June 30, 2010 • The Total Fund returned 13.89% over the Fiscal Year ending June 30, 2010 gross of fees • Performance was above the benchmark over the fiscal year and also above the median public fund return • The Total Fund Universe is comprised of Public Funds from the ICC Public Fund Universe and includes over 100 Public Funds over the five full years • Rank shows how the performance of the Total Fund compared relative to other Public Funds Total fund

9. Investment Portfolio ReturnsJune 30, 2010 *Returns shown are gross of fees; Net of fees return for the Total Fund was 13.47% for the fiscal year ended 6/30/2010 ** Benchmark 7/1/09-6/30/2010 30% Russell 3000, 20% MSCI World Ex-US, 20% BC Capital Aggregate, 8% NCREIF MPI, 8% Russell 3000+100 bps, 8% ML US High Yield BB-B Rated Constrained, 5% CPI+200 bps and 1% 91-day T-Bill. Total fund

10. Index/Actual Total ReturnsFY 2009-10

11. Funding Levels Total fund

12. PSPRS – Aggregate Employer Rates *The aggregate computed contribution rates before application of the statutory minimum Total fund

13. CORP – Aggregate Employer Rates Total fund

14. EORP – Employer Rates Total fund

15. Total Fund Changing Financial Status (in 000s) *Market value does not include future benefit increase reserve Total fund

16. PSPRS Changing Financial Status(in 000s) *Market value does not include future benefit increase reserve Total fund

17. CORP Changing Financial Status (in 000s) *Market value does not include future benefit increase reserve Total fund

18. EORP Changing Financial Status (in 000s) *Market value does not include future benefit increase reserve Total fund

19. Implications for the Future • Employer Rates • Post Retirement Benefit Increase Reserves (after cost of July 1, 2010 post retirement adjustment) • PSPRS:$275.3M (July 1 adjustment = $139.7M) • CORP: $18.7M (July 1 adjustment = $21.3M) • EORP: $7.1M (July 1 adjustment = $12.37M) • $128.6 million in new assets flowed into the reserve accounts for the plans ($90.9M for PSPRS; $22.8M for CORP; $15.3M for EORP) as of 6/30/10 • 7-1-11 Percentage of future increase for CORP and EORP beneficiaries is contingent upon new assets flowing into the CORP and EORP accounts. Total fund

20. Post-Retirement Adjustment Reserve Balances * The values for CORP are current estimates. Total fund

21. Funding Goal and Time Frame Goal: To Return the PSPRS Plans to 80% Funding Status (or better) Time Frame: 75% (or higher) Probability of Achieving the Goal Within 10 to 20 Years

24. Funded Rate w/o COLA

25. Funded Rate w COLA

26. Contribution w COLA

30. SPECIFICATIONS FOR PSPRS PLAN MODIFICATIONS “New Hires” • Minimum of 25 yrs. of service and age 52.5 for “normal retirement.” • If 25 years of service but less than 25 years of “credited service,” pension amount reduced by 4% for each year of credited service under 25 years. • “Highest five consecutive years” of compensation for benefit calculation. • Contribution rate – same as for current actives. “Current Actives” • DROP Modifications for actives not yet in DROP ‘EE contributions required on DROP salary. Interest rate credited to DROP accounts equal to one-half of the actual rate of return of the Plan for the preceding fiscal year, subject to a maximum equal to the actuarial assumed rate of return (currently 8.25%) and a minimum of 2%. • ‘EE Contribution rate – 1% per yr. increase each of next four yrs. beginning FY’12 but with “maintenance of effort” provision so that employer rates do not automatically go down with no net gain for the Plan. Following FY’15 and once the aggregate employer rate accounts for no more than two-thirds of the total required contribution rate, the employer and employee contribution rates shall be maintained in a two-thirds to one-third proportion, subject however, to a minimum employer rate of 8% (except for employers whose rate is currently less than 8%; theirs would be a minimum of 5%) and a minimum employee rate of 7.65%. • Post-Retirement Adjustment Mechanism (The “Reserve”) If Funding Ratio (at mkt. val.) is > 70% but < 80% In-Flow of “excess return” assets would be limited to 50% of what the In-Flow would otherwise be. If Funding Ratio (at mkt. val.) is 70% or < NO New In-Flows.

32. LAW ENFORCEMENT GROUPS (APA, AZCOPS, FOP, ARPO) SPECIFICATIONS FOR PSPRS PLAN CHANGES A. “New Hires” - 20 year retirement with a 50% benefit calculated by a 5 year FAC; - No 2.5% retroactive escalator at 25 years of service (standard accrual will continue at 2% past 20 years of service); - 2% increase in the employee contribution rate; - Maximum pension benefit of 70% at 30 years of service; - Restructure COLA (Reserves Account): 4% maximum award. Determine yearly COLA based on CPI. If CPI is above 4%, amount above would go back into the primary fund; - Annual Leave buyouts would not be included in final retirement pension determination.  B. Current Actives and Retirees - New DROP participants continue to pay full amount of employee contribution during participation; - Employers pay a reduced contribution amount for DROP participants equal to an amount the employer would pay when a new officer/firefighter is hired (not at the current salary rate of the DROP participant).

34. Baseline - current benefit provisions for both existing actives and new hires Alternate 1 Current Actives Change final average compensation (FAC) to 5 year FAC. Restrictive COLA provision: if funding ratio (at Market Value) is between 70% and 80%, in-flow is limited to 50%of what otherwise would flow into the COLA reserve; if funding ratio (at Market Value) is less than 70%, no new in-flow. Increase member contributions so that the plan gets to 80% funded in 2030 with a 75% probability.  (A lower increase in member contributions may do this than the 4% increase for PSPRS because CORP is a better funded plan). There will be a “maintenance of effort” provision so that employer rates do not automatically go down with no net gain to the Plan. All other benefit provisions are the same as current benefit provisions. New Hires Change normal retirement to age 52.5 with 25 years of service. Five year final average compensation (FAC). All other benefit provisions are the same as current actives.

37. Baseline - current benefit provisions for both existing actives and new hires Alternate 1 Current Actives Change final average compensation (FAC) to 5 year FAC. Restrictive COLA provision: if funding ratio (at Market Value) is between 70% and 80%, in-flow is limited to 50%of what otherwise would flow into the COLA reserve; if f funding ratio (at Market Value) is less than 70%, no new in-flow. Increase member contributions by 4% from 7% to 11% over the next four years (1% increase per year), with a “maintenance of effort” provision so that employer rates do not automatically go down with no net gain to the Plan. All other benefit provisions are the same as current benefit provisions. All other benefit provisions are the same as current benefit provisions. New Hires Change normal retirement to age 65 with 5 years of service, or age 62 with 10 years of service. Five year final average compensation (FAC). All other benefit provisions are the same as current actives.